Amendments to the law on construction are strengthen control over developers

The Federation Council approved a law on strengthening control and responsibility in the field of shared construction, which should start on July 1, 2018.

The amendments exclude the possibility of raising funds from citizens through housing certificates, limit the use of funds through housing construction co-operatives, oblige developers to disclose information about their owners and founders and impose joint liability of beneficiaries of developers for losses caused to interest holders, according to RIA Novosti.

Also from this day for all construction projects (including those already implemented) is introduced bank support. The developer must open a separate bank account in an accredited bank and carry out all calculations only from him. At the same time, banks are authorized to evaluate the purpose of payments.

For those projects, which will be implemented after July 1, bank control will be even more stringent. In particular, banks are entitled to stop settlement if there is a suspicion about misuse of funds by the developer.

In addition, the law fixes the transition to another model of housing finance – using escrow accounts. From July 1, 2018, their use in attracting the funds of equity holders will be voluntary, from July 1, 2019 – mandatory.

Source: RIA Novosti